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Chevron ( CVX ) prepares severance option for Hess workers pending

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Companies still await outcome of arbitration case with

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Chevron ( CVX ), Hess IT teams work to prepare integration

By Sheila Dang

HOUSTON, July 7 (Reuters) - Chevron ( CVX ) is laying

the groundwork to swiftly close its planned acquisition of

smaller oil producer Hess, according to two sources and

an industry analyst, including by preparing a severance program

for some Hess workers.

The preparations come as both companies await a decision in a

legal challenge from larger rival Exxon Mobil ( XOM ) that will

make or break the $53 billion deal.

Completing the Hess acquisition is key to Chevron ( CVX ) CEO Mike

Wirth's strategy. Chevron ( CVX ) would gain Hess' 30% interest in the

Stabroek oilfield block in Guyana, which is operated by Exxon

and holds more than 11 billion barrels of oil equivalent,

providing a critical addition to Chevron's ( CVX ) declining oil and gas

reserves.

Chevron ( CVX ) has assigned roles in its information technology

team to work on the Hess integration, according to an internal

organizational chart that Reuters reviewed.

Members of that team have met regularly with counterparts at

Hess in recent months to prepare logistics of combining the two

companies, said one Chevron ( CVX ) employee and a second source

familiar with the meetings. Both sources declined to be named

while discussing the confidential work.

Representatives from Chevron ( CVX ) have also held several town

hall meetings with Hess staff, the second source said.

Hess employees were informed they could request a severance

package if they are not interested in a position with the

combined company, according to a written notice to staff that

was seen by Reuters.

Chevron ( CVX ) is in the midst of a restructuring that includes laying

off up to 20% of its workforce, and Hess had about 1,800

employees at the end of 2024.

The preparations are intended to help Chevron ( CVX ) with ambitious

targets for closing the deal. The company aims to legally close

the acquisition within 48 hours of resolving the arbitration and

complete operational aspects of absorbing the company within 45

days, one of the sources said.

It can typically take several months for companies to close

an acquisition after a deal is announced. Exxon, for example,

announced it planned to acquire Pioneer Natural Resources in

October 2023 and closed the deal in May last year.

"We look forward to completing the transaction and welcoming

Hess to our company," a Chevron ( CVX ) spokesperson said in a

statement.

Hess declined to comment.

Chevron ( CVX ) initially expected to close the Hess acquisition in

the first half of 2024. That was delayed due to arbitration

claims from Exxon and CNOOC, the other minority

partner in the Guyana joint venture, who argue that they have a

contractual right of first refusal to purchase Hess' stake in

the Stabroek block.

Hess and Chevron ( CVX ) argue the clause does not apply to the sale

of the whole company. If they lose the arbitration or are unable

to agree on an acceptable resolution with Exxon and CNOOC, the

acquisition would fail, according to the terms of the deal.

Biraj Borkhataria, an analyst with RBC Capital Markets, met with

Chevron ( CVX ) Chief Financial Officer Eimear Bonner in June and said

the executive acknowledged that the lengthy arbitration dispute

has weighed on the company's stock price, but also said the time

has allowed for integration planning. Bonner indicated

Chevron ( CVX ) could close the deal quickly after resolving the

arbitration dispute, Borkhataria said in an interview.

A three-member arbitration panel that reviewed the dispute

over the Stabroek block has reached a decision, Reuters reported

on Thursday. The Paris-based International Chamber of Commerce,

which is overseeing the arbitration case, is now reviewing the

decision before it is released to the parties.